Financial Page International

4 April 2009 - Global Markets Review
Dear Adrian,
Ladies and Gentlemen, I give you three Idioms to sum up what we have seen in the markets this week:

Rome Was Not Built In One Day: If you want something to be completed properly, then its going to take time.

Drastic Times Call For Drastic Measures: When you are extremely desperate you need to take extremely desperate actions.

Hell in a Handbasket: Deteriorating and headed for complete disaster.

The first is one that we all know; there are no short-cuts to anything, especially and particularly in global finance.

The second is one that I'm sure we would all agree, desperate measures do indeed need to be taken.

And the third, is my personal view on what is going to happen if Governments and Central Banks continue in the manner that they are; you only have to look at the fundamentals this week to see that the whole world has gone 'Obama-mad' and seems to have some 'feel-good factor' that for the life of me, I cannot see.

Let's look at what happened this week shall we; let me try and establish just where the 'good news' came from - other than out of the mouths of G20 leaders in their obviously false attempt at portraying Global Unity on all things economic/fiscal.

Banks reported a positive start to the year; hmmm, I guess that's not 'negative' but given the massive handouts that they have practically all been given, it's not surprising to hear that January, February and March were not such a bad quarter.

Treasury Secretary Timothy Geithner announced plans to finance as much as $1 trillion in purchases of distressed assets from financial firms. Ladies and gentlemen, who's that good for? As far as I can see, just good for those banks and their balance sheets - but otherwise bad for the Government and their increased debt (because they do not have one trillion Dollars, they have to borrow it.

Is this not a case of robbing Peter to pay Paul?

The Labour Department's employment report for March showed the economy lost 663,000 jobs, bringing the decline since the slump began to about 5.1 million, the worst in the post-World War II era - definitely nothing positive there I can see.

US unemployment has now hit 8.5%, its highest level for 25 years.

An Institute for Supply Management report released Friday showed service industries unexpectedly contracted at a faster pace in March than in February; could that be a nugget of 'hope' - quite frankly, NOT.

US President Barack Obama called on the US to save more and for Germany and big developing countries including China to spend more as part of a global rebalancing of demand in the years ahead. Now I can see a 'little' bit of good from this statement, insomuch as Mr Obama urging Americans to SAVE more - something I have been advocating for a long time now.

It is not just the US alone, from which I can find very little 'positivity'. Let's look at Japan.

Toyota are said to be 'shocked' at the decline in car sales and they have been forced to borrow from The Bank of Japan.

Japanese business confidence tumbled at its fastest pace ever in the first quarter to the worst on record, the Bank of Japan's tankan corporate survey showed, highlighting the pain companies are facing as the global economic crisis scythes through Japan's exports.

The slide in sentiment may fuel speculation that the BOJ will take further action to ease corporate credit strains that are leading to higher funding costs.

The headline index for big manufacturers' sentiment was minus 58 in March, down 34 points from the previous quarterly survey in December, marking the biggest ever fall. It was worse than the market's median forecast of minus 55.

Japanese corporate pension funds lost a record 17.1 percent on their investments in the year that ended on March 31 due to a rise in the yen and falls in share prices as the financial crisis ground on.

So basically, I can see very little positivity within the fundamentals and therefore the sharp gains for this week - and moreover for March (biggest 4-week gain for over 70 years) - are completely out of sync' in my view with what markets should be doing.

I don't want to sound pessimistic in every Newsletter, however it is impossible for me to ignore the basics, the fundamentals and importantly, what instinct tells me. And whichever way I look at global markets, my 'instinct' tells me just one thing:

Bear Market Rally!

The bullish momentum of global equities, which started a month ago, has extended into the first days of April. But the pace of the rally, not to mention what I have said above, drive me to conclude that the claws of yet another bear trap are being sharpened.

Major bear markets for stocks, such as 1973-74 or the decade-long bear market of the 1930s, were periods of extended rallies that ultimately failed. A bear market rally is often short lived and explosive.

Since leading markets fell to new lows for this cycle early in March, the bounce back has been led by financials, which had borne the brunt of selling pressure in February. This suggested that the rise in stocks during March was largely a result of what is known as "short-covering" - where market bears who had bet on stocks to go down by borrowing and then selling them take their profits by buying the stock back at the lower price.

When stocks fell sharply on Monday, it was mainly attributed to indications from the US government that it would not stand in the way of a bankruptcy filing for General Motors. It appeared that the March rally was in danger of following the path set by the so-called Santa Claus rally that began last November and which faltered at the start of the year.

Instead, stocks resumed rising for much of this week. The S&P 500, London's FTSE 100 and Japan's Nikkei 225 index posted their first positive month of the year.

March was the FTSE Eurofirst 300's first positive month since last August.

This week, Hong Kong, Australia and the Nasdaq Composite entered positive territory for the year. In spite of declines on Friday, after sharp job losses in March, the S&P 500 was on course for its fourth consecutive weekly gain.

A run of weekly gains this long has not been recorded since the market peaked in October 2007.

Equities' bullish performance was helped by signs that the pace of the decline in some global economic indicators was easing. Accounting rule changes for US banks and the marking of their distressed assets helped extend the rally for the S&P financials index, up 50 per cent from its low last month.

Another source of support came when world leaders at the G20 meeting in London pledged $1,000bn to the International Monetary Fund to cushion the global recession for emerging markets.

Indeed, emerging markets have been leading the charge in 2009. Moscow is up 19 per cent for the year, Shanghai has jumped 33 per cent and Brazil has rallied about 16 per cent.

This type of leadership is worrying. In general, sustainable post-bubble rallies are not led by those stocks which are the bubble darlings. The prominence of emerging markets, mining and financials in the recent rally gives me pause for thought. Especially when neither emerging markets nor mining are at bargain basement levels of valuation.

At its current level, the S&P has rallied 23 per cent from its March low, a little less than the 25 per cent rally from its November low. The FTSE 100 bounced 23 per cent from its low in November and has risen some 15 per cent in the current rally. Japan's Nikkei 225 index has gained 24 per cent in the past few weeks, better than its 20 per cent rally from November to January, but less than its 33 per cent bounce last October.

Past major bear markets, including two separate bear markets during the Depression of the 1930s and the dotcom bust of 2000, ran for three years. Such analysis suggests a bottom may not be reached until autumn 2010 of next year.

Making the valuation case for some markets is also difficult. Valuations are cheap, but they are not as cheap as seen in past. The price-earnings ratios for the FTSE fell below 5 in the 1973-74 bear market.

The current rally in stocks has not been accompanied by a significant improvement in corporate credit.

Indeed, the corporate default cycle is on course to peak this year and instability could agitate equity markets, as was the case in 2002.

A significant headwind for equities also looms in the form of first-quarter earnings and guidance for the rest of the year to be revealed by companies this month.

A significant headwind for equities also looms in the form of first-quarter earnings and guidance for the rest of the year to be revealed by companies this month.

So all told, I really would like to rein-in this enthusiasm for what undoubtedly is a short-lived rally - I'll eat my hat if it is not and for those of you thinking of getting into the markets again at this point in time, I'd urge you to hold off for the moment at the very least.

On to the numbers for the week that was:
US Markets 
How the US did this week .....
 US SummaryStocks capped a week of strong gains with a small advance Friday despite a dismal employment report.
The Dow Jones Industrial Average rose 39.51 points, or 0.5%, to 8017.59, its highest close since Feb. 9. The measure has risen for four straight weeks, gaining 21% over the span - the best four-week advance since July 1938.

The VIX, which gauges the cost of using options to protect against losses in the S&P 500, decreased 5.6% to close below 40 for the first time since January.

The S&P 500 has surged 25% since sinking to a 12- year low of 676.53 on March 9 as banks from Citigroup Inc. to JPMorgan Chase said they made money in the first two months of 2009 and Treasury Secretary Timothy Geithner announced plans to finance as much as $1 trillion in purchases of distressed assets from financial firms.

Research In Motion added $10.20 to $59.29. RIM said Thursday that first-quarter earnings will amount to at least 88 cents a share, compared with the 82-cent estimate in a survey of analysts. Profit margins also are improving as RIM finds new ways to reduce costs for phone hardware, Co-Chief Executive Officer James Balsillie said.

The S&P 500 gained 3.3% in the week and the Dow added 3.1%, also capping a fourth straight weekly advance.

Wells Fargo, the biggest West Coast lender, added 6.6% to $16.34. JPMorgan, the largest bank by assets, increased 4% to $29.28. Bank of America Corp., the biggest US bank by assets, climbed 5% to $7.60 for the biggest gain in the Dow average.

Financial shares in the S&P 500 climbed 4.2% as a group for the top gain among 10 industries.

Kimco Realty Corp. climbed 26% to $9.40 for the biggest advance in the S&P 500. The largest US owner of community shopping centers said it raised $623.6 million in a share sale to reduce its debt. Four other real estate companies -- Vornado Realty Trust, Host Hotels & Resorts Inc., Boston Properties Inc. and Simon Property Group Inc. -- were among the 10 biggest gainers in the index.

Intercontinental Exchange Inc. rose 9% to $85.27. The second-largest US futures exchange was upgraded to "buy" from "neutral" at Goldman Sachs, which said it has more pricing power than competitors.

Gilead Sciences Inc. gained 5.1% to $46.98. The biggest supplier of AIDS drugs in the US said a study found its experimental drug reduced blood pressure in patients who had not responded well to other medications.

Bristol-Myers Squibb Co. fell 5.4% to $20.17 and led health-care shares to the steepest retreat among 10 groups. The drugmaker was cut to "market perform" from "outperform" by Sanford C. Bernstein & Co., which said the company is a less likely target for acquisition by another pharmaceutical company as the stock is expensive relative to earnings.

Humana Inc. led managed care companies in the S&P 500 to a 3.2% drop. Insurers that provide government-subsidized care to the elderly may have their earnings reduced by as much as 20% from a proposed change in US Medicare Advantage program, Wachovia Corp. said. Humana fell 5.7% to $25.46.

Akamai Technologies Inc. slid 6.9% to $20.06 for the biggest drop in the S&P 500. The largest supplier of software and services to make Web sites load faster was cut to "hold" from "buy" at Citigroup, which said competition from Limelight Networks Inc. could be a "threat" to Akamai's commerce business.

Micron Technology Inc. slid 2.8% to $4.50. The biggest US producer of computer-memory chips reported a second-quarter adjusted loss of 81 cents a share, wider than the average analyst estimate of 63 cents, as slower demand forced chip prices below the cost of production.

Financial shares have led the S&P 500's rebound, surging 60% collectively since March 6 as Bernanke delivers record- low mortgage rates.

Fixed 30-year mortgage rates fell to a record low for the second consecutive week last week, hitting 4.78%, Freddie Mac said Thursday. Home-loan applications in the US rose for the fourth straight week last week as a decline in borrowing costs spurred homeowners to refinance, while purchases of new houses unexpectedly rose in February.

All 10 industry groups in the S&P 500 have climbed at least 9.8% since the index hit a 12-year low on March 9, with industrial, raw-materials and so-called consumer discretionary companies rallying more than 31%.

The S&P 500 has trimmed its 2009 loss to less than 7% from as much as 25%. The benchmark index for US stocks slumped 38% last year, its worst annual return since the Great Depression, after mounting credit-market losses dragged the nation into a recession.

Earnings for companies in the index decreased 61% in the fourth quarter of 2008, according to data compiled by Bloomberg. The first quarter of 2009 is projected to be the ninth straight decline in corporate profits, the longest since the government began tallying quarterly data in 1947. 
European Markets 
What has been happening in Europe this week .....
 Europe SummaryEuropean stocks fell, trimming their fourth straight weekly advance, as a surge in US unemployment to a 25-year high damped optimism that the worst of the global recession is over.
Credit Suisse Group AG and Deutsche Bank AG slid more than 1.8% as a report showed employers in America cut 663,000 jobs last month. Novo Nordisk A/S tumbled 14% after the drugmaker's experimental diabetes shot received a split recommendation from a US advisory panel. Renault SA and Daimler AG led automakers higher as Credit Suisse upgraded the industry to "overweight."

The Dow Jones Stoxx 600 Index slid 1% to 186.17. The measure posted its fourth week of gains, the longest streak since the global bear market that wiped out $37 trillion of equity value began in October 2007.

National benchmark indexes retreated in 14 of the 18 western European markets. France's CAC 40 lost 1.1% and Germany's DAX added 0.1%. The UK's FTSE 100 sank 2.3% as Tesco Plc retreated.

Credit Suisse, Switzerland's second-largest bank, slid 5.2% to 37.34 Swiss francs, trimming its weekly gain to 11%. Deutsche Bank, Germany's biggest, dropped 1.8% to 34.99 Euros.

Financial shares rallied this week as the US's Financial Accounting Standards Board agreed to relax fair-value, or mark- to-market, accounting that requires banks to revalue assets each quarter to reflect market prices. Writedowns and credit-related losses at financial institutions have swelled to $1.29 trillion since the start of 2007.

GERMANY

German stocks advanced, with the DAX Index capping its longest weekly rising streak since October 2007, as optimism from the Group of 20 meeting outweighed concerns over US unemployment rising to a 25-year high.

Bayerische Motoren Werke AG and Daimler AG rallied for a fourth day as Credit Suisse Group AG lifted its stance on European car shares to "overweight." BASF advanced 4.6% as the largest chemicals maker won antitrust approval in the US and China for its takeover of Ciba Holding AG. E.ON AG and RWE AG, Germany's biggest utilities, paced falling shares.

The benchmark DAX Index advanced 0.1% to 4,384.99, adding 4.3% this week for its fourth straight weekly advance. The HDAX Index of the country's 110 largest companies added 0.1%.

The DAX Index climbed 6.1% Thursday, its biggest rally this year, as Group of 20 leaders agreed on a blueprint for reining in the excesses that fed the worst financial crisis in six decades while pledging more than $1 trillion in emergency aid to cushion the economic fallout from it.

BMW, the biggest luxury carmaker, rallied 3.8% to 27.12 Euros and Daimler, the second-largest, surged 5.9% to 23.60 Euros. Credit Suisse increased its recommendation for European car stocks to "overweight" from "market weight," saying in a report it believes "investors are in danger of becoming too pessimistic about car sales."

BASF climbed 4.6% to 25.96 Euros. The company said it received clearance from US and Chinese antitrust authorities to complete its $5.1 billion acquisition, including debt, of Ciba after agreeing to sell within six months its worldwide business to make yellow and blue pigments.

K+S AG gained 2.6% to 39.72 Euros as UniCredit Markets & Investment Banking raised its share-price estimate for Europe's largest producer of potash used in fertilizers 4% to 52 Euros.

E.ON, Germany's biggest utility, retreated 2.3% to 21.39 Euros while smaller competitor RWE declined 4.1% to 52.43 Euros.

Continental jumped 13% to 16.05 Euros, the highest close since Feb. 13. The car-parts maker and its majority owner Schaeffler Group said they aim to save more than 100 million Euros ($134 million) a year by jointly purchasing steel and other materials as the companies struggle with 21 billion Euros of debt.

Gerresheimer gained 5.2% to 14.67 Euros as Jefferies Group Inc. upgraded the medical-packaging company to "buy" from "hold."

Pfleiderer added 12% to 3.53 Euros as UniCredit Markets & Investment Banking upgraded the laminate- flooring maker to "hold" from "sell," saying concerns about the company's operating performance and financial structure are "largely reflected" in the share price.

ProSiebenSat.1 Media AG rallied 32% to 1.73 Euros, the steepest gain on record, after the country's biggest private broadcaster said it plans to buy back as many as 4.9 million of its own shares.

Q-Cells dropped 5.9% to 15.39 Euros as Renewable Energy Corporation ASA, the Norwegian polysilicon maker in which it owns a 17% stake, said it will cut second quarter output by almost 50%.

Solon slipped 3.2% to 10.45 Euros. Equinet AG cut its recommendation for the solar company to "reduce" from "hold."

Rheinmetall gained 2.8% to 28.84 Euros as Equinet upgraded the maker of weapons for the US Army Abram's tank to "accumulate" from "hold."

Software AG plunged 6.2% to 52.37 Euros as Sal. Oppenheim Jr. & Cie. downgraded Germany's second-largest software maker to "neutral" from "buy."

FRANCE

France's benchmark CAC 40 Index slipped 1.1% to 2,958.74, snapping a three-day advance. The measure completed its fourth weekly gain, the longest rising streak since October 2007.

The SBF-120 Index declined 0.6%.

Akka Technologies SA gained 25 cents, or 2.7%, to 9.50 Euros, the highest intraday price in almost two months. The technology consulting company said 2008 net income rose to 16.6 million Euros ($22.3 million) from 9.2 million Euros a year earlier.

Carrefour SA dropped 66 cents, or 2.1%, to 30.14 Euros, falling from the highest in more than four months. Natixis reiterated its "reduce" recommendation on Europe's largest retailer, saying Marc Oursin, chief executive officer of Carrefour Belgium, Thursday held a press conference during which he said Carrefour Belgium wasn't for sale. The brokerage noted "market speculation has been rife about the disposal of Carrefour's Belgian assets."

CGGVeritas rose 56.2 cents, or 6.1%, to 9.83 Euros, climbing for a second day. The world's largest seismic surveyor was upgraded to "buy" from "hold" at Societe Generale SA. Analysts at the bank said the company has "more flexibility than expected when it comes to cutting costs" and cited "the idea which has been increasingly inferred by US industry players that the current down cycle could last for a relatively short period of time."

Etablissements Maurel & Prom SA gained 65.5 cents, or 6.4%, to 10.96 Euros, the highest level since October. Exane BNP Paribas increased its share-price estimate for the French oil explorer operating in Latin America and Africa by 7% to 14.5 Euros.

The bank, which has an "outperform" recommendation on the stock, said "the Onal-Omko production ramp-up towards the end of 2009 and appraisal and exploration drilling could further support Maurel et Prom's re-rating relative to the sector."

Euler Hermes SA surged 4.10 Euros, or 15%, to 31.56 Euros, the biggest intraday gain since at least April 2000. The world's largest credit insurer was upgraded to "outperform" from "underperform" at Cheuvreux, which said "strong improvement in underwriting quality in the industry should bring first visible impact in first quarter."

France Telecom SA dropped for a second day, losing 46.5 cents, or 2.7%, to 16.90 Euros. Europe's third- largest phone company was cut to "underperform" from "in- line" at Cazenove, which cited "substantial challenges facing the French operations."

Les Nouveaux ConstructEurs gained for a third day this week, adding 5 cents, or 1.9%, to 2.76 Euros. Berenberg Bank upgraded the real-estate developer to "buy" from "sell," citing Thursday's analysts' meeting.

Michelin & Cie., the world's second-largest tiremaker, gained for a fourth day, adding 96 cents, or 2.9%, to 33.56 Euros. Pirelli & C. SpA, Europe's third- largest maker of tires, rose as much as 13% after Intermonte Sim SpA upgraded the stock to "outperform" from "neutral." The analysts cited "some initial signs that the automotive industry is stabilizing, mainly thanks to government incentives in various countries."

Outremer Telecom added 12 cents, or 2.4%, to 5.09 Euros, on course for the highest close in two weeks. The telephone company operating in French overseas territories said its profit for 2008 was 2.7 million Euros, compared with a 2.1 million-Euro loss a year earlier.

Berenberg Bank reiterated its "buy" recommendation on the stock, saying "this is still a big growth story set to go on generating substantial cash flows."

Renault SA rose 1.58 cents, or 8.2%, to 20.71 Euros, extending gains of 14% Thursday. European auto shares were raised to "overweight" at Credit Suisse Group AG, which said "we believe investors are in danger of becoming too pessimistic about car sales."

PSA Peugeot Citroen added 46.5 cents, or 2.7%, to 17.57 Euros.

Sanofi-Aventis SA, Europe's third-largest drugmaker fell 1.12 Euros, or 2.6%, to 41.95 Euros, paring Thursday's gains. Health-care shares were the worst performers in Europe, led by Novo Nordisk A/S after a US advisory panel didn't unanimously recommend approval of the Danish company's experimental diabetes drug.

Societe Generale SA rose for a fourth day, adding 1.43 Euros, or 4.5%, to 33.14 Euros. France's third- largest bank is "well positioned to withstand a turn in credit quality," Goldman Sachs Group Inc. said. The brokerage kept the stock in its "conviction buy" list and increased its earnings- per-share estimates for 2009 and 2010.

Valeo SA rose to the highest level since November, adding 93 cents, or 7.5%, to 13.39 Euros. HSBC Holdings Plc initiated coverage of France's second-largest auto-parts maker with an "overweight" recommendation. The brokerage sees "only limited refinancing risks and no need for a capital increase in 2009."

Vallourec SA advanced 4.14 Euros, or 5.5%, to 79.50 Euros, climbing for a fourth day. Morgan Stanley upgraded the second-largest maker of steel tubes to carry oil and gas to "equal-weight" from "underweight."

BELGIUM

In Brussels, the Bel 20 ended the week at 1,808.37, down 1.24% on the day.

Umicore Friday announced the sale of its small electronic materials packaging business to the German firm Heraeus.

The company is also selling its shares in South Korean firm Duksan Hi-Metal Co. The combined proceeds from the two transactions will be Eur12 million, Umicore said.

Belgian Semiconductor specialists Melexis is to buy the vision business of Sensata Technology in a deal expected to close by the end of this month.

THE NETHERLANDS

In Amsterdam, the AEX also ended down, negative to the tune of 0.56% on ther day, closing at 230.76.

Dutch telecoms group KPN said on Friday it would add up to 390 million Euros ($520.5 million) to its pension fund by 2012 to restore cover ratios to at least 105%.

It also agreed to pay an extra 12.5 million Euros annually to the pension fund of IT unit Getronics between 2010 and 2013.

The funds are required by the Dutch Central Bank to boost current cover ratios - the ratio of assets to pension liabilities- to the minimum required level of 105% within five years.

SWITZERLAND

In Zurich, the SMI ended the week with a bump Friday, down 2.62% to close at 5,042.99.

The Swiss National Bank said Friday that a specially-created investment fund has bought UBS AG's remaining $22.2 billion in toxic assets as part of a bailout plan agreed between the country's biggest bank and the government last year.

Independent assessors set the price, which is $700 million lower than the book value of $22.9 billion estimated by UBS in September 2008, the central bank said. UBS said the transaction would result in a $300 million charge against its first-quarter results.

The securities are linked to US and European mortgages, as well as other loan arrangements, the SNB said.

The special fund has now purchased a total of $38.7 billion in UBS assets using money provided by the SNB. This is substantially less than foreseen in the government's original bailout package, which reserved $54 billion to help the Zurich-based bank dispose of high-risk securities.

The fund will run for 8-12 years during which the assets will be progressively sold off, with any profit beyond the first 1 billion Swiss francs ($879 million) being shared between the Swiss National Bank and UBS.

The bank's shares were up 1.4% at 11.98 Swiss francs ($10.54) on the Zurich exchange.

Julius Baer Holding, Switzerland's biggest dedicated wealth manager, said outflows continued at hedge fund arm GAM into this year, but at a substantially slower pace than in the fourth quarter of 2008.

GAM's assets under management should stabilise and recover in the second half of 2009 as clients focus on performance and risk control, Julius Baer Chief Financial Officer Dieter Enkelmann said in slides for a presentation at the Morgan Stanley European Financials Conference in London.

Julius Baer's core private banking unit should see continued inflows in 2009 after hiring new client managers over the past two years, Enkelmann said, though private banking gross margin would narrow because of the unfavourable asset mix and expected subdued client activity.

The private bank on Tuesday named 34-year-old Boris Collardi as its new chief executive, replacing Hans de Gier, who stepped into the role after his predecessor, Alex Widmer, committed suicide in December 2008.

Baer has already started to cut investment management and support jobs, with staff reduced by about 10% in European asset management. It said if business development continues along the lines of January and February, group operating expenses should fall by between 10% and 15%.

AUSTRIA

In Vienna, the ATX closed the week at 1,824.54, gains of 1.79% on the day.

Julius Meinl V, chairman of an Austrian bank that bears his family's name, was arrested in a potential €3 billion ($4 billion) fraud case involving a real-estate fund created by the bank.

Wednesday night's arrest of Mr. Meinl and the investigation in a related case of former Austrian finance minister Karl-Heinz Grasser has caused a stir in Austria. Mr. Meinl is an heir to a coffee-roasting and grocery empire that dates back to 1862. A Vienna street, Julius Meinl Gasse, bears the family name. Mr. Grasser was one of Austria's most popular politicians in the Austria Liberal Party or FPÖ -- frequently photographed together with his socialite wife.

Charged on Wednesday by Vienna prosecutors with embezzlement and fraud in connection with two companies, Mr. Meinl was one of about a dozen suspects named in the case, said Gerhard Jarosch, a spokesman for the prosecutor's office.

At the center of the charges is Meinl European Land Ltd., a company based in the isle of Jersey and controlled by Mr. Meinl. The real-estate firm was created by Meinl Bank but publicly listed on the Vienna Stock Exchange.

The probe comes as a second blow to Austria's financial institutions in recent months. In December, Austria's Bank Medici was identified as a conduit for more than $2 billion in investments in the New York-based Ponzi scheme run by Bernard Madoff. No charges have been filed against any Bank Medici employees. Bank Medici, its directors and senior management have said they knew nothing about the Madoff fraud at the time.

Unlike in the Madoff case, Meinl European Land did make actual investments, primarily in Eastern European real estate, the prosecution spokesman said. Mr. Jarosch said prosecutors haven't yet put a number on how much of the fund's money they allege was stolen in total.

Meinl Bank said the arrest "has no effect on the business of the bank. The bank is stable and the deposits safe."

Mr. Jarosch alleged that Mr. Meinl and other suspects ran an expensive advertising campaign in Austria between about 2004 and 2006 to sell certificates representing shares in Meinl European Land, but not the shares themselves, to thousands of small investors.

SWEDEN

Sweden's benchmark OMX Stockholm 30 Index has erased its 2009 decline after the Krona fell to a record low versus the Euro, boosting earnings for companies that rely on international markets for more than two-thirds of their sales.

Raiffeisen Capital Management, Versicherungskammer Bayern and Svenska Handelsbanken AB are betting the boost to exporters will offset Sweden's worst economic contraction in more than half a century and meltdowns in Latvia, Estonia and Lithuania.

The OMX 30 dropped 0.37% Friday to close what was otherwise a positive week, at 711.16.

DENMARK

The OMX Copenhagen 20 market took quite a battering Friday, down 2.83% to close at 238.66 - but still positive for the week.

Novo Nordisk dropped 13% to 244.5 Kroner.

Outside advisers to the Food and Drug Administration voted 6-6 with one abstention that tumors seen in rodent studies should preclude the medicine's approval.

The panel voted 8-5 that the company's data ruled out "unacceptable excess" heart risks, a concern for all new therapies for Type 2 diabetes.

FINLAND

In Helsinki, the OMX dropped 0.53% Friday to bring the week to an end at 4,883.60.

Fortum Oyj Chief Executive Officer Mikael Lilius and Chairman Peter Fagernaes will step down following an outcry over pay and options for top managers at the state-controlled utility.

"My family's been threatened and I've had to employ a bodyguard," Lilius said in comments Friday in Helsinki relayed by Fortum spokeswoman Maria Romantschuk. "I've been paid these fees and I haven't negotiated the amounts."

Lilius received 3.02 million Euros ($4.01 million) from the company last year, more than two thirds of it in options and performance bonuses. Finnish Defense Minister Jyri Haekaemies, who has stewardship of the country's shareholdings, Thursday announced plans to examine pay at companies where the government holds a stake, following media reports criticizing compensation at Fortum. The government owns 50.8% of the utility.

Lilius will retire at the end of the year when he turns 60, the Espoo, Finland-based company said in a statement Friday. Fagernaes withdrew his nomination to continue as chairman after Finland's biggest utility holds its annual meeting April 7.

Fortum fell as much as 48 cents, or 3.5%, to 13.11 Euros and was down 2.3% as of 4:21 p.m. in Helsinki. The shares have declined 13% this year, valuing Finland's biggest utility at 11.8 billion Euros.

Neste Oil Corporation's Annual General Meeting (AGM) was held Friday at the Helsinki Fair Centre and adopted the company's financial statements and consolidated financial statements for 2008 and discharged the Supervisory Board, Board of Directors, and management from liability for 2008.

The AGM also approved the Board of Directors' proposal regarding the distribution of the company's profit for 2008, sanctioning payment of a dividend of Eur 0.80 per share.

This will be paid to all shareholders included in the register of shareholders maintained by the Euroclear Finland on the record date set for payment of the dividend, which shall be 8 April 2009. Payment will be made on Friday, 17 April 2009.

NORWAY

In Oslo, the OBX shed a whopping 3.04% Friday to close the week at 209.01.

Norwegian engineering group Aker Solutions said it will buy assets worth $258 million, of which $206 million are from majority owner Aker, sending its own shares down nearly 8%.

Shares in solar industry group Renewable Energy Corporation plunged after it said it would cut solar cell and module production in the second quarter by nearly 50% to adjust to weak markets.

Norwegian REC said it planned to restart halted production from July 1 to comply with supply contracts and that it did not envisage more changes in volumes in the second half of 2009.

Demand for solar panels has dropped sharply during the global crisis, sending prices for raw materials such as polysilicon tumbling, and hurting profits of solar energy component makers.

SPAIN

The Ibex 35 in Madrid closed down just 0.18% Friday to end at 8,319.90 for the week.

Spain's television sector is due for a shakeup as advertising revenue declines and the number of digital terrestrial television channels grows, a senior government official said Friday.

"I'm convinced that in the next years the market will purge (some TV channels)... There will be mergers and others will be eliminated altogether," Spanish Deputy Industry Minister for Telecommunications Francisco Ros said in an interview.

Spanish TV broadcasters aim to cut costs as a recession in Spain reduces the demand for TV advertising. Next year's digital switch will leave traditional audience leaders Gestevision Telecinco SA (TL5.MC) and Antena 3 de Television SA (A3TV.MC) with a smaller share of the total advertising market.

The switchover will increase the programming grid from less than 10 channels to as many as 40 in some regions.

Spanish hotel occupancy rates are expected to fall 10 percentage points to 75% over Easter because of the country's economic crisis and soaring unemployment, the Spanish tourism association Cehat said on Friday.

"This could be considered a satisfactory figure, given the economic situation," the head of Cehat Juan Molas told journalists.

He said hotels were offering discounts of up to 15% to attract visitors tempted to stay home during a recession expected to be the worst since the 1930s Civil War.

Portuguese brokerage BPI said in an investment note that last-minute bookings could provide some relief to hoteliers, many of which depend on the Easter break for the lion's share of earnings.

Shares in hotel groups Sol Melia and NH Hoteles had risen sharply in anticipation of good news.

PORTUGAL

In Lisbon, the PSI General Index shed a little under half a percentage point Friday, down 0.46% to close the day at 2,153.39.

EDP-Energias do Brasil, The Brazilian unit of Portugal's biggest power company said it received a 76-million real ($34 million), 14-year loan from Brazil's BNDES state development bank, to help pay for the 29-megawatt PCH Santa Fe power plant in the state of Espirito Santo.

EDP-Energias do Brasil rose 0.4% to 25.48 Reals.

ITALY

Italy's benchmark S&P/MIB Index rose for a fourth day, adding 89, or 0.5%, to 16,900.

Banco Popolare, the first Italian bank to seek state aid during the financial crisis, rose 4.5 cents, or 1.1%, to 4.28 Euros, taking this week's gain to 21%. Intermonte Sim SpA upgraded the stock to "neutral" from "underperform."

Buzzi Unicem rose 35 cents, or 3.9%, to 9.4 Euros. Intermonte Sim SpA increased its price estimate on Italy's second-biggest cement maker to 12 Euros from 10 Euros and kept a "buy" rating. The brokerage cited "less risky" exposure to eastern Europe because of the extra funds granted to the International Monetary Fund Thursday.

Eni declined 48 cents, or 3.1%, to 14.8 Euros. Natixis Securities cut its price estimate on the stock to 18 Euros from 19 Euros. The brokerage kept an "add" recommendation on Eni, while noting the deadline of April 9 for OAO Gazprom to exercise its option to buy some Russian assets from Italy's largest oil company may create some uncertainty.

Fiat rose 12 cents, or 1.8%, to 6.87, extending gains of 27% Thursday.

Auto shares were the best performers in Europe after being raised to "overweight" at Credit Suisse Group AG, which said "investors are in danger of becoming too pessimistic about car sales."

Gemina SpA, which owns the manager of Rome's airports, climbed 3.6 cents, or 12%, to 34.5 cents, the biggest gain since November 2007.

Clessidra Sgr said it has held preliminary talks with industrial players including Changi Airport regarding its stake in Investimenti Infrastrutture, the biggest investor in Gemina SpA. Il Sole 24 Ore previously reported Changi Airports International Pte., a unit of the owner of Singapore's main airport, is ready to buy a stake in Gemina. Equita Sim SpA said this may be a "good" opportunity for Gemina.

Impregilo rose for a fourth day, adding 4 cents, or 1.9%, to 2.13 Euros. European Securities Network LLP added Italy's biggest builder to its top picks among European medium-sized and small companies.

Indesit, Europe's third-largest home-appliance maker, surged 36.25 cents, or 17%, to 2.51 Euros, the highest in about 1 1/2 months. Intermonte Sim SpA upgraded the stock to "outperform" from "underperform."

Pirelli, Europe's third-largest maker of tires, rose for a fourth day, adding 1.06 cents, or 5.6%, to 20.06 cents. Intermonte Sim SpA upgraded the stock to "outperform" from "neutral," citing "some initial signs that the automotive industry is stabilizing, mainly thanks to government incentives in various countries."

Prysmian gained 64 cents, or 8.2%, to 8.45 Euros, the steepest increase in almost three weeks. The energy-cable maker controlled by Goldman Sachs Group Inc. was rated "buy" in new coverage at Berenberg Bank, which set a price estimate of 12 Euros on the stock.

The company said it won a new contract in Russia for the construction of a high-voltage power transmission grid. The contract has a value of 20 million Euros.

UniCredit, Italy's largest bank by assets, gained for a fourth session, adding 10.6 cents, or 7.5%, to 1.53 Euros. 

GREECE

In Athens, the ATX closed up 0.1% Friday to end the week at 1,754.62.

TOP Ships, a seaborne crude oil and petroleum products provider, reported a return to profit in the fourth quarter, despite a decline in revenue, as expenses and costs were lowered sharply. In addition, the company said it has appointed Alexandros Tsirikos as chief financial officer, effective April 1.

Tsirikos joined the company in July 2007 as corporate development officer. Prior to joining TOP Ships, Tsirikos was a manager with PricewaterhouseCoopers.

The Athens, Greece-based company reported a net income of $8.43 million or $0.30 per share compared to a loss of $37.44 million or $2.67 per share in the same quarter last year.

Revenues for the quarter were $37.00 million, down from $51.79 million in the comparable quarter last year.

Voyage expenses for the quarter decreased to $1.71 million from $14.93 million in the year ago quarter. Charter hire expense was $5.81 million, down from $18.04 million a year ago. Dry-docking costs were $364 thousand compared to $9.83 million in the prior-year quarter.

ATEbank Romania, the unit of the state-controlled Greek lender Agricultural Bank of Greece SA, estimates to boost its gross profit three-fold this year over 2008 to 12 million lei, on 16.5% higher incomes, the bank's business plan for this year shows.

The lender posted a gross profit of 4.13 million at the end of 2008.
The UK Market 
Did it follow the Global trend .....
 UK MarketsUK stocks retreated, trimming their fourth straight weekly advance, as US unemployment climbed to the highest in 25 years, damping optimism that the worst of the recession is over.
Tesco Plc led declines by retailers as JPMorgan Chase & Co. advised clients to sell Britain's largest supermarket owner. BHP Billiton Ltd. and BP Plc led commodity producers lower as crude oil retreated. AstraZeneca Plc fell 3.1% as the US Food and Drug Administration requested more safety data for its Seroquel XR drug.

The benchmark FTSE 100 Index lost 95.3, or 2.3%, to 4,029.67 in London, trimming this week's gain to 3.4%. The gauge has advanced for four weeks, the longest winning streak since October 2007. The FTSE All-Share Index slipped 1.8% Friday. Ireland's ISEQ Index dropped 1.4% as the country's central bank forecast the economy will shrink as much as 12% between 2008 and 2010.

Stocks extended declines after a report showed the US jobless rate climbed to the highest level since 1983 as the world's largest economy lost 663,000 jobs last month.

The FTSE 100 has rebounded 15% from its 2009 lows and Thursday climbed above 4,000 for the first time in six weeks.

Tesco lost 4.6% to 332.6 pence, the most since November. JPMorgan reiterated its "underweight" recommendation for the shares and cut its earnings estimates, citing declining profitability and a possible full-year loss in the US

"We believe that Tesco is making the mistake of letting the margin dictate its strategy," analysts wrote in a report to investors. "Its over-ranged stores, the discount brand initiative and excessive range flexing are all indicators of this."

J Sainsbury Plc, Britain's third-largest supermarket chain, lost 3.7% to 312 pence. Marks & Spencer Group Plc, the UK's biggest clothing retailer, fell 3.8% to 316 pence.

BHP Billiton, the world's largest mining company and the largest oil and gas producer in Australia, lost 4.8% to 1,441 pence, trimming some of Thursday's 10% rally. BP, Europe's second-largest oil company, retreated 3.2% to 457.5 pence. Royal Dutch Shell Plc, the region's largest oil company, lost 2.8% to 1,547 pence.

AstraZeneca dropped 3.1% to 2,383 pence. FDA staff said the UK's second-biggest drugmaker should provide more long-term data about Seroquel XR's safety in patients suffering just from anxiety.

The regulators said longer term use of the drug may have risks for the heart and brain.

Electrocomponents climbed 3.75 pence, or 2.9%, to 134.75. The UK supplier of 350,000 products ranging from cables to calculators canceled a special dividend of 7.4 pence a share and fired 470 workers globally to conserve cash amid the global recession.

Johnson Matthey climbed 34 pence, or 2.9%, to 1,193. Credit Suisse Group AG upgraded the make of all catalytic converters to "outperform" from "neutral," citing "improving autos fundamentals."

Northern Foods declined 1.75 pence, or 3.1%, to 54.25 pence after UBS AG downgraded the largest UK maker of frozen pizzas to "neutral" from "buy.".

Royal Bank of Scotland rose 2.4 pence, or 8.5%, to 30.6 after Britain's biggest government-controlled lender said it will cut more jobs in addition to 2,700 previously announced.

United Drug rose 4.9 cents, or 3.1%, to 1.60 Euros. The company, which supplies pharmacies and hospitals with medicines and medical equipment, said profit before exceptional costs this fiscal year will be "at least in line" with the previous year.
Asia Pacific Regional Markets 
Did they set the tone or follow the lead .....
Asiapac IndicesJAPAN
Japanese stocks extended a fourth weekly gain on optimism efforts to halt the global recession are taking effect, helping send the Yen to a five-month low.

Toyota Motor Corp. rose 7.3% as world leaders agreed on measures to combat the recession and the weaker Yen lifted the value of overseas sales. Kawasaki Kisen Kaisha Ltd., a shipper that had cut its profit target on slowing Chinese growth, soared 9.7% as Goldman Sachs Group Inc. recommended the stock and China's production expanded for the first time in six months. Tokyo Gas Co. sank 4.6% as investors sold so- called defensive shares to fund purchases of cyclical stocks.

The Nikkei 225 Stock Average added 30.06, or 0.3%, to close at 8,749.84 in Tokyo. The Topix index rose 4.67, or 0.6%, to 831.36, with four shares falling for every three that advanced. The Nikkei climbed 1.4% on the week, while the Topix gained 0.8%, a fourth-straight advance for both.

Toyota, the world's largest automaker, jumped 7.3% to 3,700 Yen. Smaller rival Nissan Motor Co. climbed 5.9% to 464 Yen, posting a 19% weekly gain, the most since January 2000. Panasonic Corp., the world's top maker of consumer electronics, added 6.1% to 1,214 Yen.

The Yen touched 100 versus the Dollar Friday for the first time since Nov. 4. Japan's large manufacturers forecast an average exchange rate of 97.18 Yen per Dollar in fiscal 2009, according to the Bank of Japan's Tankan quarterly survey released on April 1. A weaker Yen increases the value of overseas sales for Japanese companies.

Kawasaki Kisen, Japan's No. 3 shipping line, advanced 9.7% to 363 Yen, and bigger rival Mitsui O.S.K. Lines Ltd. climbed 4.7% to 537 Yen. Goldman Sachs initiated Kawasaki Kisen at "buy," saying it was undervalued.

In January, Kawasaki Kisen more than halved its net income forecast for the year ended March 31 as slowing growth in China reduced demand for commodity shipping.

Mitsui Fudosan, the nation's biggest property developer, leapt 7% to 1,311 Yen, and Mitsubishi Estate Co., No 2., added 6.7% to 1,351 Yen. A gauge of real-estate companies jumped the most among the Topix's 33 industry groups, followed by automakers.

The Markit iTraxx Japan index of credit-default swaps dropped 50 basis points to 355 as of 10:33 a.m., according to BNP Paribas SA, indicating credit markets are easing. Last week, Tokyo-based Azel Corp. became Japan's eighth listed property business to go bankrupt this year because of tighter bank lending and failures among construction companies.

The Nikkei has climbed 24% from a 26-year low on March 10 amid optimism central banks can tame the financial crisis and Japan's government will buy stocks to bolster the market. The gauge's estimated dividend yield has fallen to 1.9%, smaller than 2.8% on the Standard & Poor's 500 Index in the US, according to Bloomberg data.

The 25-day Toraku index, which compares the number of gainers and losers on the Tokyo Stock Exchange, rose to 126.74 Thursday, the highest since May 22 and nearing the 130 level that signals stocks are poised to fall.

Tokyo Gas dived 4.6% to 336 Yen, and Tokyo Electric Power Co., Asia's largest utility, fell 3% to 2,415 Yen. West Japan Railway Co. dived 4.1% to 307,000 Yen, while NTT DoCoMo Inc., Japan's No. 1 mobile-phone operator, lost 2.6% to 137,800 Yen. Utilities, train operators and phone providers were among the 10 biggest losers among Topix Groups.

Nikkei futures expiring in June edged up 0.5% to 8,730 in Osaka and gained 0.8% to 8,770 in Singapore.

HONG KONG

Wall Street's overnight strength on hopes the Group of 20 will help revive the global economy and gains in Hong Kong Exchanges on strong turnover sent Hong Kong shares higher Friday for the second consecutive session.

The blue-chip Hang Seng Index rose 23.72 points, or 0.2%, to 14,545.69 after trading in a narrow range between 14,392.19 and 14,644.82. The index is up 3% for the week and up 28% from its March 9 low of 11,344.

Turnover fell slightly to HK$71.44 billion from HK$75.22 billion Thursday.

HK Exchanges, the local bourse operator, jumped 5.1% to HK$83.85 on strong turnover on the index.

HSBC rose 0.1% to HK$49.45, following a 15.3% advance Thursday, on hopes the US economic downturn is bottoming out.

China Shipping Container advanced 11.2% to HK$1.78 after Goldman Sachs upgraded the stock to buy from sell on hopes that global cargo trade will stabilize.

Foxconn International was the index's poorest performer Friday on profit-taking. It fell 5.2% to HK$3.26 after it gained 12% in the past three sessions.

SOUTH KOREA

South Korean shares extended their winning streak into a fourth consecutive session Friday on ongoing hopes for economic recovery, but the upward march decelerated after the recent run of gains.

The Korea Composite Stock Price Index, or Kospi, gained 6.78 points, or 0.5%, to end at 1283.75. The index is up 3.7% on this week following last week's 5.7% gain.

Foreigners were net buyers for a third consecutive session Friday by picking up a net KRW471.3 billion worth of stocks. Domestic institutions were net buyers of stocks worth KRW36.7 billion while local retail investors were net sellers of KRW528.9 billion worth.

Banks and carmakers extended their gains on ongoing expectations global economies will hit a bottom soon, said analysts.

Shinhan Financial Group rose 4.1% to KRW28,900, and KB Financial Group advanced 2.7% to KRW37,800.

Among carmakers, Hyundai Motor rose 1.3% to KRW61,500, and Kia Motors gained 4% to KRW9,590.

But issues of more brokerage and technology firms took a breather. Hynix Semiconductor fell 0.8% to KRW12,600, and Mirae Asset Securities dropped 0.4% to KRW79,700.

CHINA

A decline in resource companies on rotational selling outweighed gains in banks, putting an end to China shares' three-day rising streak Friday.

The benchmark Shanghai Composite Index, which tracks both A and B shares, ended down 0.2% at 2419.78.

The Shenzhen Composite Index fell 0.5% to 801.06.

Analysts said the Shanghai index will likely continue to trade in the 2300-2500 range next week, tilting toward 2500 if the overseas markets continue to perform strongly.

The Shanghai index traded mostly in the positive territory Friday until the last 15 minutes of the session.

The index rose 2.1% in the first four sessions of the week, and is up 32.9% year to date.

Resource companies led the day's decline on rotational selling, according to Haitong Securities analyst Zhang Qi.

Shandong Gold-Mining fell 5.7% to CNY74.93, Zijin Mining Group dropped 4.3% to CNY10.36 while Western Mining ended down 4.7% at CNY12.40.

Banks "have become the flavor of the day" following a Caijing Magazine report Thursday. The report said new RMB loans issued in March totaled around CNY1.6 trillion, which would be sharply higher than February's CNY1.07 trillion.

Thanks to the huge surge in loans, investors are expecting banks to post stronger-than-expected earnings in the first quarter.

Bank of Communications ended up 4.1% at CNY6.89, and China Merchants Bank rose 2.2% to CNY16.87.

TAIWAN

Taiwan's share prices rose for the fourth consecutive day Friday amid optimism that the United States economy is stabilizing, sending the market's benchmark index past the 5,500-point mark for the first time since early October, according to media reports reaching here from Taipei.

Led by financial shares, the Taiex advanced 55.85 points, or 1. 02%, to close at 5,529.63 on turnover of 161.96 billion New Taiwan Dollars (4.85 billion US Dollars), the highest turnover in 2009.

The local bourse opened at 5,541.34 and fluctuated between 5, 567.15 and 5,482.18, buoyed by a 1.1 trillion US Dollars deal to revive the global economy reached at the G20 summit in London and the European Central Bank's decision to cut interest rates.

A total of 8.53 billion shares changed hands.

Six of eight major stock categories gained ground, with banking and financial shares surging the most at 4.1%, buoyed by the appreciation of the Taiwan Dollar against the US greenback.

Cement stocks rose 3.8%, foodstuff shares moved up 3.4%, construction stocks advanced 3.3%, textile stocks increased 1.1%, paper and pulp issues rose 1.0%, and machinery and electronics shares moved up 0.4%.

Only paper and pulp issues, which fell 1.0%, and plastics and chemicals shares, which shed 0.3%, lost ground.

Gainers outnumbered losers 1,320 to 699, with 159 stocks remaining unchanged.

THE PHILIPPINES

Philippine share prices on Friday closed the week higher as Wall Street continued to climb.

The bellwether Philippine Stock Exchange index soared 45.71 points or 2.3052% to 2,028.59 while the all shares surged 23 points or 1.7914% to 1,306.92.

With world leaders getting their act together and investors thinking that the worst may be over, it was nearly all bright and beautiful for the local bourse, analysts said.

Gainers trampled losers, 82 to 20, while 30 stocks were unchanged.

Except for mining and oil, which pulled back 1.2263%, all the other five sub-indices advanced, led by property's 4.1703-percent rise and financials' 3.534-percent climb.

Volume traded reached 1.33 billion valued at about P2.876 billion.

Sixteen of the top 20 most active stocks for the day were in the green.

Telecommunications giant Philippine Long Distance Telephone Co. , the day's top-traded, jumped P20 or 0.9328% to P2,185.

Geothermal power producer PNOC-Energy Development Corp. rose P0.20 or 5.1948% to P4.05.

Developer Megaworld Corp. added P0.04 or 7.1429% at P0.60.

Metropolitan Bank & Trust Co., one of the country's largest lenders in terms of assets, climbed P2 or 7.5472% to P28.50.

SINGAPORE

Singapore shares closed 0.97% higher on Friday on optimism over a promise by world leaders to work together to fight the global economic crisis.

The blue-chip Straits Times Index rose 17.53 points to 1,820.87 on volume of 1.84 billion shares worth $1.62 billion (US$1.08 billion).

Gainers led losers 294 to 194, with 707 issues unchanged.

Banking shares closed higher. United Overseas Bank rose 20 cents to $10.68, DBS was up two cents to $9.02 and Oversea-Chinese Banking Corp gained nine cents to $5.14.

Among property shares, CapitaLand advanced 10 cents to $2.70, City Developments was up 28 cents to $5.98 and Keppel Land edged up six cents to $1.66.

Singapore Airlines gained eight cents to $10.64 while Singapore Telecommunications eased five cents to $2.50.

Shipping firm Neptune Orient Lines rose 13 cents to $1.36 while agricultural products supplier Olam International was off two cents to $1.65.

THAILAND

In Bangkok, expectations of a further interest rate cut next week helped boost property firms and construction companies, both sectors rising more than 2%, with top housing firm Land & Houses surging more than 7% to an 11-week high.

Shares in Siam Cement, Thailand's top industrial conglomerate, rose 3.4% after Reuters reported the company expected to conclude acquisitions in its core businesses late this year as part of its plan to expand in Southeast Asia.

The Stock Exchange of Thailand (SET) index moved up 3.08 points, or 2.99%, to close at 446.04 points on Friday.

Some 2.56 billion shares worth 14.06 billion baht (about 401.71 million US Dollars) changed hands.

INDONESIA

Indonesian shares ended slightly up on Friday in mixed trading, with the index hitting a new high, signaling a possible start to a bullish trend following the regional and global markets, analysts said.

The Jakarta Composite Index closed up 0.63 points, or 0.04%, at 1,500.36, the highest since Oct. 15 after the market crashed following the Wall Street-led financial crisis. Some 3.2 billion shares valued at Rp 3.4 trillion ($295.8 million) changed hands. Decliners led gainers 82 to 69, with 60 stocks remained unchanged.

PT Perusahaan Gas Negara Tbk, Indonesia's largest gas distributor, gained 5.6% to Rp 2,375, its biggest increase since March 23, while PT Bayan Resources Tbk, a coal miner, added 2.6% to Rp 1,610.

MALAYSIA

Share prices on Bursa Malaysia ended mostly higher Friday, although losses in heavyweights especially in some of the banking counters had capped gains boosted by the change of guard in the government, dealers said.

Datuk Seri Najib Tun Razak took over as Malaysia's sixth prime minister from Tun Abdullah Ahmad Badawi Friday.

The benchmark Kuala Lumpur Composite Index (KLCI) rose 1.94 points or 0.214% to 910.74 after opening 5.67 points higher at 910.74.

Maybank and AMMB Holdings each shed six sen to RM4.08 and RM2.63, Public Bank dipped 10 sen to RM7.80 and British American Tobacco fell 50 sen to RM45.50.

TA Securities head of research, Stephen Soo said the market was consolidating after a three-day rally and the trend is expected to remain the same next week.

The Finance Index added 5.76 points to 6,871.08, the Industrial Index increased 0.50 of a point to 2,136.75 and the Plantation Index rose 14.8 points to 4,693.82.

Of the FTSE-BM Index series, the FBMEmas appreciated 11.95 points to 5,948.75, the FBM30 increased 10.11 points to 5,831.9, the FBM-MDQ rose 39.46 points to 3,033.86 while the FBM2BRD dropped 17.13 points to 3,909.65.

Gainers led losers by 284 to 242 while 200 counters were unchanged, 522 untraded and 34 others suspended.

Volume rose to 938.355 million shares valued at RM1.137 billion from 841.299 million shares valued at RM1.208 billion on Thursday.

Among the actives, KNM Group increased one sen to 43 sen, Mulpha was unchanged at 30.5 sen, Zelan added 1.5 sen to 66 sen, Gamuda rose 11 sen to RM2.34 while     Malaysian Resources declined one sen to 93 sen.

Of the heavyweights, Sime Darby was flat at RM5.85, Tenaga and MISC increased five sen each to RM6.30 and RM8.50 respectively, Bumiputera Commerce went up 20 sen to RM7.60 and IOI Corp increased four sen to RM4.10.

At close, volume on the Main Board rose to 861.673 million shares worth RM1.123 billion compared with 771.439 million shares worth RM 1.196 billion Thursday.

Turnover on the Second Board increased to 33.325 million shares valued at RM8.967 million from 29.698 million shares valued at RM7.916 million previously.

Volume on the Mesdaq Market appreciated to 16.517 million shares worth RM2.415 million against the 11.156 million shares worth RM1.534 million previously.

Warrants dipped to 25.306 million shares valued at RM1.932 million from 27.558 million shares worth RM2.203 million previously.

INDIA

The five-day-long rally in the stock markets last week witnessed a reversal on Monday, both on weak global cues as well as profit booking by investors.

The Sensex opened 146 points lower from Friday's close, and by the end of the day, it had lost 480 points to close at 9,568. The broader Nifty closed down 130 points at 2,978.

The continuing hard times faced by US auto makers and weak economic outlook projected by US banks had a ripple effect on Indian stocks too.

SBI Mutual Fund announced the launch of its gold exchange traded fund labelled SBI Gold Exchange Traded Scheme (GETS). The fund expects to mop up Rs 150-200 crore from the new offer, said Mr Srinivas Jain, Chief Marketing Officer, SBI Mutual Fund.

The Indian bourses bounced back on Tuesday amid volatility. Though the US markets closed on a negative note, the firm trend in Asian markets stabilised the sentiment. The Sensex finished higher at 9708, a gain of 140 points, while the Nifty rose by 43 points to end at 3020. Year-end buying by fund houses to prop-up the NAVs seems to caused the pullback.

The upward movement in most Asian markets and gains in Reliance Industries and banks helped shares reverse early losses to end higher for the second successive session on Wednesday. The Sensex rose 193 points to end at 9,902 after trading between 9,546and 9,921during the session. The Nifty rose 39 points to close at 3,060.

Crisil downgraded ratings on 84 entities in the 2008-09 fiscal, while upgrading those on only two.

The economic slowdown and a sharp downturn in the investment environment, particularly during the second half of 2008-09, have affected Indian companies' credit quality.

Of the 84 entities whose ratings were downgraded in 2008-09, 15 were from the automobile and automotive ancillaries industries, 14 from the financial sector, eight from the textiles industry, and seven each from the metals & mining industry, and construction and real estate sectors.

Strong global equity markets, hopes of further rate cuts by the RBI, and some positive corporate developments pushed the Sensex to a five-month high on Thursday.

The Sensex, which opened above 10,000 with a positive gap of over 200 points finished the day at an impressive 10,349, with a significant gain of 446 points. The broader Nifty index too spurted 150 points to close at 3,211.

Investors bought into shares expecting a further cut in domestic lending rates. Reliance Industries, which announced gas production from the Krishna- Godavari basin, led the rally.

Better-than-expected March sales reported by cement and automobile companies and short covering by institutional investors also buoyed the sentiment.

The board of Satyam Computer Services has modified the bidding process for the sale of 51% in the company by allowing for the open auction method instead of the sealed bidding process.

In a letter to the stock exchanges, the board has stated that "if there are one or more financial bids which are at least 90% of the highest bid, the board will treat the highest bid as the floor price and conduct an open auction."

The markets were closed on Friday on account of Sri Ram Navami.

AUSTRALIA

The Australian share market continued its recent recovery Friday, thanks to solid gains on Wall Street and expectations that the global economy will avoid a depression, thanks to massive government intervention.

Local profit taking before US jobs data, due later Friday, was soaked up fairly easily as investors rushed to increase their equity market allocations.

The benchmark S&P/ASX 200 index closed up 55.4 points or 1.5% at 3735.6 after hitting a three-month high of 3750.1. Share trading volumes, worth more than A$4.5 billion, were particularly large for a Friday.

The S&P/ASX 200 was back in positive territory for the year-to-date, having risen 18.7% in the past four weeks.

Cyclicals led the charge, with heavyweight financials and resources generating most of the strength. Traders said the mood was increasingly upbeat.

Among banks, ANZ rose 6.5% to A$17.40 and National Australia Bank rose 6.2% to A$22.84, while Commonwealth and Westpac, lagged.

Property trusts were mixed, with Stockland up 12% to A$3.83 and Westfield down 0.9% at A$10.06.

Similarly, in insurance, AMP rose 5.2% to A$5.04, while QBE fell 1.3% to A$19.06 and IAG fell 1.8% to A$3.37.

Materials were generally strong, with BHP up 3.7% to A$34.60 and Rio Tinto up 4.2% to A$60.40, though Newcrest dived 7.3% to A$30.79 and Lihir fell 8.3% to A$3.10 after the G20 decided in favor of selling gold to fund its plans to expand the International Monetary Fund.

At the smaller end, Minara surged 16 cents to 61 cents, taking its two-day gain to 53% despite a lack of news.

Steel stocks surged on US peer gains, with Bluescope up 9.2% at A$2.96 and OneSteel up 16% at A$2.69, while building materials took a breather after recent strength.

Defensives underperformed, with CSL down 3.6% at A$31.26, Wesfarmers down 1.9% at A$19.34 and Telstra down 2.9% at A$3.07.

NEW ZEALAND

New Zealand shares closed the week on a strong note, buoyed by positive sentiment arising from the sense that members at the G20 meeting in London were all singing from the same song-sheet.

The NZX-50 Index closed Friday up 1.1%, or 28.68 points, at 2,614.48, having earlier in the session being as high as 2,633.36. The index ended down 0.8% for the week.

Only a handful of stocks in the top 50 failed to rise. Medical equipment maker Fisher & Paykel Healthcare fell 2.9% to NZ$3.06, hurt by the rise of the NZ Dollar to a three-month high of NZ$0.5898.

Unrelated whiteware manufacturer Fisher & Paykel Appliances, expected shortly to announce a capital raising, lost 4.1% to NZ$0.47.

Otherwise stocks rose across the board with some up sharply due to illiquidity.

Rural servicing company PGG Wrightson gained 11.1% to NZ$1.13 while Tourism Holdings defied the currency rise to jump 8.9% to NZ$0.49 on volume of 6,600.

Air New Zealand, which benefits from a strong currency, gained 4.4% to NZ$0.96, its highest closing level since early October.
Global Commodities 
'Food for thought' or 'a Grain of truth' .....
 CommoditiesCommodity markets made a positive start to the second quarter amid a growing sense of optimism about the global economy's recovery prospects following the G20 meeting.
Copper extended its push above $4,000 a tonne, rising 6.6% over the week to $4,316 a tonne.

Shanghai copper prices are trading at a premium to London Metal Exchange copper prices, which has helped draw metal into China, where traders anticipate further government buying to replenish strategic stockpiles.

Some delegates at the CRU/Cesco copper conference, the industry's largest annual meeting, in Chile this week, were concerned that the market could stage a correction if the support provided by Chinese government buying ended because there was little evidence of an improvement in underlying demand.

In energy markets, ICE May Brent oil rose 72 cents to $53.47 a barrel on Friday, for a rise over the week of 2.9%. Nymex May West Texas Intermediate lost 13 cents to $52.51 a barrel, virtually flat over the week.

Agricultural commodities rallied after the US said American farmers would cut the amount of land devoted to growing crops this year to 246m acres, down 2.8% from the previous year, which sparked concerns about supply tightness.

Over the week, CBOT May soyabeans rose 7.1% to $9.82 a bushel while CBOT May corn gained 3.4% at $4.00 a bushel and CBOT May wheat increased 9% at $5.53 a bushel. Gold traded around $900 a troy ounce on Friday, off 0.3% on the day and 2.3% lower on the week as gains for equity markets hit sentiment towards bullion.

On Thursday, gold sank to its lowest level of the week at $893.70 after the G20 agreed to ask the IMF to bring forward bullion sales to finance help for the poor.

The IMF plans to sell 403 tonnes of gold but speculation that additional sales were to be considered was played down by analysts. The sale of the IMF gold is likely to be conducted under the Central Bank Gold Agreement, which is due to expire on 26 September.

Because of the limited time before the expiry of the CBGA and the legislative hurdles that need to be cleared (including a US act of Congress), it is almost guaranteed that a third five-year central bank gold agreement (CBGA3) would be announced, probably at the IMF spring meetings where more detail on the planned gold sale would materialise.
Global Currencies 
In for a Penny, in for a Pound .....
UK Markets
The Dollar and the Yen retreated this week amid signs that the worst of the economic downturn may have passed and as policymakers at the Group of 20 summit in London promised fresh funds to fight the crisis.
Purchasing managers' indices for March from the US, UK and China all beat expectations; but let's gace it Ladies and Gentlemen, those expectations were terribly bleak in the first place!

Although still suggesting a contraction in activity, the improvement raised hopes that aggressive fiscal and monetary loosening across the world was beginning to filter through to the global economy.

This boosted stock markets worldwide, lessening haven demand for the Dollar and the Yen.

The commitment from the G20 group of global leaders in London to raise the funds available to the International Monetary Fund to fight the global financial crisis by $1,000bn also lifted investor sentiment.

Analysts said the unexpectedly large increase in IMF funds was a positive surprise, arguing that a new "London consensus" showed that industrialised nations wanted to prevent a growing crisis in emerging market countries.

Currencies in emerging markets performed strongly.

The Brazilian Real rose 3.2% to R$2.2162 against the Dollar over the week, the South African Rand climbed 4.5% to R9.1200 and the South Korean Won gained 1% to Won1,335.50.

Central and eastern European currencies, which have tumbled to multi-year lows as the financial crisis has raised fears over the ability of countries in the region to finance their deficits, also performed strongly.

The Hungarian Forint rose 4.1% to Ft220.63 against the Dollar over the week, while the Polish Zloty climbed 5.5% to 3.3289 zlotys.

Currencies of commodity producing countries rose, with the Australian Dollar rising 3.2% to $0.7121 against the Dollar on the week and the New Zealand Dollar climbing 2.7% to $0.5830. The Dollar fell 1.5% to $1.3424 against the Euro on the week, with the single currency receiving additional support from the European Central Bank's decision to cut interest rates by less than expected on Thursday.

The ECB lowered its main lending rate by 25 basis points to 1.25%, confounding expectations for a 50bp cut.
 
The Dollar fell 4.1% to $1.4831 against the Pound over the week and dropped 1.4% to SFr1.1331 against the Swiss franc.

The Dollar did advance against the Yen, however, briefly breaching Y100 for the first time in five months.

Analysts said the rise in risk appetite had renewed interest in carry trades, in which the low-yielding Yen is sold to finance purchases of riskier, higher-yielding assets - and encouraged Japanese investors to pour money abroad.

Over the week, the Yen fell 1.8% to Y99.78 against the Dollar, lost 3.3% to Y133.95 against the Euro and dropped 5.9% to Y148.02 against the Pound.

And to bring currencies to a close this week in my usual manner, here in China on the over-the-counter market, the Dollar ended at CNY6.8348, little changed from Thursday's close of CNY6.8349. It traded between CNY6.8315 and CNY6.8371.
China 
Key news eminating from China this week .....
 China MarketsSave us, China!
Since Lehman shook the world, every main stock market is down: among the biggest, declines range from a quarter in the UK to a third in the US. All, that is, except China, sitting atop a 16% gain. Increasingly, a good day in Shanghai nudges up markets elsewhere, especially in resources-led economies.

It shouldn't. A surge of initial public offerings in recent years means China's market cap is now 73% of gross domestic product - in a similar league to the US (68), the UK (67) and Japan (64).

But that is where comparisons end.

Shanghai is still a mockery of a market! (sorry to say that living here but .....)

The main reason is overhang.

China's wholly state-owned parents have shoved most of their productive assets into listed subsidiaries, retaining perhaps four-fifths of the shares.

The expiry of post-IPO lock-ups has meant that the proportion of technically tradable shares has risen to more than 50%.

But since the vast majority of those are still in state hands, they will not be traded.

A share price here in China represents the value of the share - it tells you next to nothing about the value of the issuer.

The second is restricted access. In recent rallies, markets dominated by local investors - Taiwan, Korea, Malaysia - have outperformed more open exchanges.

China is the 'ne plus ultra' of domesticity: licensed foreigners account for just over 1% of the market cap.

Given capital controls, Chinese investors have no alternative if they want exposure to equities.

Anecdotal evidence from corporate treasurers suggests that perhaps a third of the bank loan explosion this year has ended up in stocks.

Then there is spasmodic state intervention. The finance ministry regularly tweaks stamp duty to tease the index up or down.

IPOs have been frozen for at least six months.

There is still no sign of the promised index futures to provide mechanisms for hedging.

Knowing all this, participants make little pretence towards value investing.

Shanghai is a speculative free-for-all ruled almost entirely by momentum - a poor indicator of the health of a nation or, by extension, a global economy.

*****************************************************

The vacancy rate in Shanghai's top- quality office buildings rose to the highest since 2005 in the first quarter after supply increased, property consultant Colliers International said.

The rate rose to 12.3% from about 10% in the fourth quarter, Colliers said in a statement distributed late Thursday. New demand for office space in the first three months of 2009 was less than 3,500 square meters (37,674 square feet), about 3% of the level in the same period of 2008 and 2007.

Shanghai's economic growth slowed to 9.7% last year, the first time since 1992 that it has fallen below 10%, as the global economic crisis eroded demand for Chinese exports and sapped foreign investment in the Asian nation.

"New demand growth virtually held stagnant," Colliers said. "Shanghai's grade A office market will continue to face mounting pressure as there is no sign of improvement in the external environment."

Shanghai's high-end residential market also posted drops in average rents and prices of about 10% in the first quarter from the previous quarter, Colliers said. The global financial crisis has reduced the number of overseas tenants in the city, fueling declines, the property consultant said.

*****************************************************

A measure of activity in China's manufacturing sector crossed back into expansionary territory in March for the first time since last September, suggesting a marked improvement in industry as both output and new orders surged.

China's official purchasing managers' index (PMI) for March rose from 49.0 in February to 52.4, the China Federation of Logistics and Purchasing (CFLP) said on Thursday.

The reading compared with a record low of 38.8 plumbed in November and is the strongest since May 2008.

A reading over 50 indicates an expansion of activity in the manufacturing sector while one below 50 suggests contraction.

Annual gross domestic product growth fell from 13% in all of 2007 to 6.8% in the fourth quarter.

Exceptionally weak data for exports and industrial output in the first two months of this year suggest to many economists that growth probably slowed further in the first quarter.

The official PMI moved in the opposite direction of the PMI produced for brokerage CLSA, released on Wednesday. That measure fell to 44.8 in March from 45.1 in February, as a drop in new domestic orders snapped a three-month streak of increases.

Output and new orders from both domestic and overseas clients all improved markedly in March, according to the official survey, driving a surge in manufacturers' purchases of raw materials.

The output sub-index rose to 56.9 from 51.2 in February, while new domestic orders were up to 54.6 and the quantities of purchases index hit 54.0. New export orders still showed contraction, at 47.5, but were stronger than the 43.4 reading a month earlier.

It was similar expectations of a rebound in demand for metals and other raw materials by Chinese manufacturers that led to a rally in commodity markets.

However, not all analysts were so sure the strong reading could be taken as a sign the economy is set to recover.

The PMI data are an encouraging sign coming after recent strong lending and investment data and might be further evidence that fiscal stimulus is starting to have an impact, said one analyst, albeit in Hong Kong.

*****************************************************

Chinese web portal Sohu is expected to set the price for its gaming division spinoff on Wednesday after closing its order books on its Nasdaq initial public offering one day earlier than planned amid solid investor interest.

Changyou - which draws all of its growth from its hugely popular Tian Long Ba Bu multiplayer online role-playing game - is only the third IPO on Nasdaq this year.

The IPO which is expected to raise up to $138m, is also the first from a Chinese company since a tiny offering from Pansoft, an enterprise resource planning software maker, in September last year, according to Nasdaq's website. Pansoft shares, as well as those of two other Chinese companies listed on Nasdaq in August 2008, have fallen by double-digit percentages since their IPOs.

Sources close to the deal said that strong demand for the Changyou listing probably had more to do with "the fact that the parent company and its management are well-known and well-liked, and that Changyou is in a particularly defensive sector" than a more general improvement in the market as a whole.

Sohu itself is listed on Nasdaq. The company has thrived in recent years but it is the online gaming unit that has helped Sohu retain revenue growth even as the advertising market has slowed, making it a darling among investors.

Charles Zhang, Sohu chief executive, has said the online gaming unit needs to be spun off to provide a sharper focus and give the unit's staff bigger incentives to successfully develop new games. For now, Sohu will retain 71% of Changyou.

Changyou is offering 7.5m American Depositary Shares, half of which represent new shares and the other half shares offered by Sohu. The price per share will be set between US$14 and US$16, about seven times 2009 earnings - significantly lower than the valuations of its closest rivals Tencent, Netease and Giant.

Credit Suisse and Merrill Lynch are joint bookrunners of the offering. Citi and Susquehanna are managing the IPO.
Summary  
The coming week looks like .....
Commodities Indices
A shortened trading week and little US economic data leads me to believe that next week markets will be trading practically sideways and I see some of the gains of the past month starting to erode; not dramatically so, but it will be a start and a sign of more declines to come as companies prepare for the earnings season.
Many markets will be closed on Friday in recognition of the Easter holiday, so trading volumes will be quite thin I would imagine.

Thursday's US trade balance report could be interesting because it will help give some guidance to first Quarter GDP.

Weekly jobless claims will also be in the spotlight next week as it will provide more guidance for the economy and the jobs market. But if this week is anything to go by, irrespective of whether it is good or bad news, markets will not be swayed from their current optimism - other than some pre-holiday profit-taking I feel.

It will be interesting to see whether the pattern continues though, of 'revising' previously 'better than expected' figures to the downside.

I think a lot of negative data has been ignored as people rushed in to buy stocks. I think, as I have said, that a reality check is looming out there. We still have a lot of negative data to go through and at some point, people are going to sit-up and take notice - after all, you cannot wear rose-coloured glasses forever, no matter which side of the Atlantic you are sitting.

This leads me nicely into Europe and what is happening next week. The Bank of England will announce its interest rate decision next week when market participants will learn if the bank will implement additional quantitative easing measures.

This will be an interesting meeting because the central bank is running out of options I feel. At this point you have to question just how much they can realistically do. I think they will tinker with the announcement but I think that is it. There is also a real risk that the bank will sit back and say they want to see if any of the steps taken will have an impact on the economy.

In the euro zone, market participants will be looking at data relevant to first-quarter economic growth.

Investors will look to Euro zone February retail sales figures for confirmation that weak consumption growth will detract from GDP in the first quarter of this year.

Economists expect retail sales in the EU to have fallen 0.4% in the month, following January's 0.1% rise. Year-over-year, expectations are for sales levels to have declined 2.5%, following January's -2.2% print.

Given the weak figure we got from manufacturing goods consumption in France and the disappointing figure from Germany, I think that sales could be below consensus, around -0.6%. This might not have a lot of market implication, but it will definitely have some implication in terms of growth for Q1 2009.

European investors will also focus their attention on German industrial production, as well as factory orders for February. The factory orders report from the Federal Ministry of Economics and Technology is due out on Wednesday, while the industrial production report, also from the Economics Ministry, will be released on Thursday.

Currently, expectations are for factory orders to have fallen 2.1% in February, following the previous month's stronger-than-expected decline of 8.0%. On an annualized basis, the consensus forecast is for orders to contract 36.5%, following January's 37.9% decline.

Industrial production is also forecast to decline further due to falling demand. The median consensus forecast is for a 3.0% contraction in February, following January's record 7.5% fall. Year-over-year, industrial production is expected to slip 21.7%, outdoing the previous month's 19.3% decrease.

The key Asia-Pacific events next week will be monetary policy meetings from the Reserve Bank of Australia and the Bank of Japan, as well as employment results out of Australia.

The Bank of Japan is expected to hold its target rate at 0.10%, but perhaps alter its assessment of the economy and expand measures taken to boost corporate finance, economists say. The bank has begun outright purchases of commercial paper and Japanese government bonds, and most recently upped the amount of JGBs it will buy.

The BOJ might want to counter the effects of slumping economic growth by increasing its asset purchase program, which amounts to quantitative easing in all but name.

By the middle of the week, the focus shifts to the Reserve Bank of Australia's monetary policy meeting. Economists and the market are at odds over whether the central bank will cut rates, after keeping rates on hold at 3.25% at the last meeting.

Economists expect no change, while the market has priced in an 81% change of a 25 basis point cut.

By predicting no move until August and a larger total move, we diverge from market pricing on all counts. The central bank has cut rates by a total of 400 basis points since September 2008.

Finally, the other major release in the region will be the Australian unemployment report for March. I think the unemployment rate might climb to 5.5% from 5.2% amid slow economic growth, lower corporate profits and anecdotes of company layoffs.

Australian employment is due for a correction I feel. To date, however, this just hasn't happened really.

The consensus forecast is for a climb in the unemployment rate to 5.4%.

All told then, next week will most definitely be quieter than this week in terms of Media-hype and rhetoric and now that the G20 leaders have shown that they can all stand together for a photo-shoot and pretend that they have 'unity' and 'cohesion' in their views on how to address the crisis, it is going to be back to reality I feel for markets and I do expect at some point in the near future, that 'reality' to kick back in with a bang.

Fantasy, dreams and hopes will start to fade and within the next 2-3 weeks - probably around the third week of April - I see the 10-15% of global declines starting to happen; and given the 20% plus gains of this bear-market rally, I might go as far to revamp those negative figures and say that we'll see a commensurate percentage in declines before May is through!
As always, I will keep you posted with major developments as/when they occur in the week ahead.
 
In the meantime, I wish you all a very pleasant weekend.
 
Market Newsletter Written By 


Adrian Page

Managing Director
Financial Page International
 
In This Issue
US Markets
European Markets
The UK Market
Asia Pacific Markets
Quick Links
Services
Our Services 
Personal Banking
Useful Tools